Energy Minister Greg Barker has been accused of going back on a commitment to take action on Feed-in Tariff (FiT) degression for small-scale Anaerobic Digestion.
In a statement released today, officials at the Department for Energy and Climate Change (DECC) announced that they will not now be consulting on what steps it can take to counter the subsidy slump that threatens the roll-out of successful AD schemes.
The news is a direct contradiction to previous statements, including a letter sent from Energy Minister Barker to industry leaders, that indicated action would be taken following a tariff review.
Farmers have been increasingly looking to AD to generate an income from farm wastes and residues, by converting them into renewable biogas and biofertiliser.
However, the FiT trigger mechanism was including sites that had yet to be commissioned and the dip in subsidy support would make many new schemes financially unviable.
In a letter sent to the industry at the end of last year, Mr Barker promised that the small-scale AD sector would not be unfairly disadvantaged by the degression mechanism, which he said was resulting in “unintended consequences…meaning degression is likely to come sooner than expected”.
He set out that “action may well be needed to avoid the risk of damage to the genuine small-scale AD sector”, with DECC planning to “consult on measures, including a tariff review”.
Official figures confirmed that the capacity trigger for sub 500kW AD plants had been reached late last year and the degression of the Feed-in Tariff would follow in April.
However, despite intense lobbying by industry group ADBA and its member companies, officials at DECC today confirmed they would be taking no action to defer or reduce the 20% tariff reduction.
Charlotte Morton, chief executive of ADBA, commented: “It is deeply disappointing that DECC have not been able to follow through on their commitment to ‘consult on measures', including a tariff review and this decision appears contrary to the government’s stated support for small scale AD on farms in particular.
“Smaller scale AD has a range of environmental benefits on top of generating electricity, including encouraging better manure management on farms and reducing the use of artificial fertilisers. A range of UK businesses are also in the process of developing technology and expertise which will be lost without the early-stage support which the current FIT level provides.
“The highest tariff degressions were designed to deal with ‘runaway’ deployment, but are hitting smaller scale AD despite just five sub 250kW plants coming online in 2013. This clearly goes against the spirit and intention of the policy, which will be hard to swallow for farmers, developers and their employees.
“The window to save small AD is getting smaller but is not yet closed, as there are a number of plants already in construction. We welcome DECC’s commitment to continue to work to support the sector.
“If Ministers are serious about keeping small scale AD alive, realising sustainable rural growth and delivering the recommendations of the Ecosystem Markets Task Force and the Agri-Tech Strategy, they will recognise that a stable FIT regime is central to the industry’s growth.”
REA Head of Policy Paul Thompson added: “This is a bitter disappointment. We have worked hard with industry colleagues and DECC officials on proposals to fix the FIT for small and mid-scale AD, so it is extremely frustrating that this has not been done. The Government has kicked this issue into the long grass, leaving several projects and companies in the sector at extreme risk.
“Small scale AD will be hit the hardest. Much of this takes place on farms, turning farm wastes and residues into self-supplied green energy and fertiliser, strengthening rural businesses, creating jobs and reducing emissions.
“We will continue to state the case to Government for AD at all scales and work to secure a viable solution as soon as possible.”
